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Hazardous Conditions for the Auto Industry

DETROIT — For the first time since 1993, automakers sold fewer than a million new cars and trucks in a single month in the United States, as a reeling economy scared people away from showrooms in September, and many eager buyers were unable to get loans.

With industry sales dropping 26.6 percent over all compared with a year ago, car companies are likely to cut more production and jobs to compensate for falling revenues.

The credit crisis contributed heavily to the steep decline — analysts estimated that it cost the industry up to 100,000 vehicle sales in the final week of the month, on top of lost sales because of high gas prices and the shaky economy.

Auto executives said Wednesday that the industry faced more misery ahead until a bailout package was passed in Washington.

Nearly every automaker posted double-digit declines. Sales were down 34.5 percent at the Ford Motor Company, 32.8 percent at Chrysler, 32.3 percent at Toyota and 24 percent at Honda.

G.M. bucked the trend somewhat with only a 15.6 percent drop in sales. But it was helped by employee pricing deals offered to all consumers and an increase in sales to rental car fleets.

Over all, the industry sold about 964,000 vehicles in September compared with 1.31 million in the same month a year earlier, according to the research firm Autodata. There were 24 selling days this September compared with 25 a year ago.

“This is the worst point we have seen in 15 years,” said Jesse Toprak, head of industry analysis for the automotive Web site Edmunds.com. “And it is likely to be even worse in the month of October.”

Mr. Toprak said that sales for the entire year were projected to about 14 million vehicles, by far the lowest figure in more than a decade.

“There’s no question this is an automotive recession,” said Erich Merkle, an analyst at the accounting and consulting firm Crowe Horwath in Grand Rapids, Mich. “It’s going to take us a long time before we get back to that 16 million mark.”

Automakers said that tighter lending practices by banks had prevented countless consumers from getting financing deals for new vehicles. Moreover, they say the paralysis in Washington on a bailout bill and the startling failures of Wall Street investment banks have frightened away even creditworthy consumers.

At Toyota, the year-to-year sales drop was the worst the Japanese automaker has experienced in the United States in 20 years.

“There is a lack of consumer confidence,” said Donald V. Esmond, senior vice president for Toyota’s North American sales operations. “They’ve got their hand on their wallet, and they’re not spending their disposable income.”

The drop-off in sales across the industry occurred despite a nearly 19 percent increase in incentives from a year earlier. The average automaker incentive during the month was $2,801, compared with $2,357 in September of 2007, according to Edmunds.com.

Automakers said there had been a drastic decline in dealership traffic toward the end of the month, when the troubles on Wall Street caused a full-blown economic crisis.

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“During the last 10 days of the month it was extremely weak,” said George Pipas, a market analyst at Ford. “It was tantamount, really, to a natural disaster.”

Executives at the Detroit automakers declined to say whether they were planning further production cuts in the fourth quarter to balance the shrinking demand.

But analysts said further cuts and reorganization moves appeared inevitable.

“We believe we will see an increase in promotional activity to stimulate demand, as well as a reduction in production volumes,” Mr. Toprak said.

Detroit has already cut tens of thousands of jobs since 2006. Many of its assembly plants have been idled for weeks at a time this year to reduce production of slow-selling pickup trucks and sport utility vehicles.

G.M., Ford and Chrysler are also burning through billions of dollars in cash reserves to finance new products, even as their businesses falter. G.M. lost $15.5 billion in its second quarter, and Ford lost $7.8 billion.

“People want to buy, but they just don’t want to pull the trigger until they know who’s going to be in office and what this economy is going to do,” Mr. Futrell said. “What the consumer doesn’t understand is that there’s probably not a better time to buy a car. The deals are out there, but I think everybody’s so skeptical that they’re trying to hold off.”

But vehicles of all sizes went begging in September — sales of light trucks dropped 31 percent, while cars fell 21 percent, according to Autodata.

“We don’t anticipate seeing recovery in the industry until we can get some recovery in housing,” said Rebecca Lindland, an analyst with the consulting firm Global Insight in Lexington, Mass. “The consumer has gone from being nervous and uncertain to just downright scared.”

The steady slide in sales has left automakers wondering whether the worst is yet to come.

“We are looking at a very fragile economy,” said Emily Kolinski-Morris, Ford’s chief economist. “I don’t think anyone can say where the bottom might be.”

Correction: October 7, 2008

A picture caption on Thursday with an article about declining automobile sales, using information from The Associated Press, referred incorrectly to the status of a Toyota dealership shown in Alameda, Calif. The dealership, Toyota of Alameda, remains open for business; it is not closed.